In a recent piece for The Sunday Times, Prof Heather McGregor, Executive Dean of the Edinburgh Business School, asked the question: “What do climate change rules mean for the little guys?” She went on to bemoan the lack of a “bog standard guide” on climate risk reporting for the many service businesses that make up the UK economy. Here is our reply:

The problem set is the same whether you are a manufacturing or a service business. The various guides and resources that do exist will serve both. An obvious difference between manufacturing and service businesses is that manufacturers’ Scope 1 and 2 (i.e.: emissions arising from their own use of fuel and energy services), and their Scope 3 upstream emissions (i.e.: emissions arising from production of their materials) will frequently be much higher and the activities physically tangible. Nevertheless both go through the same processes to assess, record and report emissions.

The big problem area in assessing risk and opportunity is downstream Scope 3, i.e.: emissions arising from the use of your product or service by your customers. The point here is that these emissions are driven by what your customer does with your goods or services, not whether you are a service business or a manufacturer.  Sometimes these dwarf the upstream emissions.  The problem I think is that a manufacturer is more inclined to understand  the environmental dimensions of their customer, and their future business prospects. I can imagine many service businesses might not have the same technical expertise or professional interest. They need to get some, they always did, but it’s just that now they really need to put a bit more E in their PESTLE analysis . To ask for a bog standard guide on how to assess climate risk is like a boffin asking for a bog standard guide on how to make a profit.  The service businesses that understand the emissions profiles of their customers, and how their service can help drive them down, will be the ones that prosper. 

Its not service specific nor aimed at TCFD but this is closest I have come to a helpful introductory guide for the “little guys”, from a Swedish group: 1.5C Business Playbook . I think it gets over that future success depends on integrating climate thinking into your business, it’s not just about having detailed guidance to inform reporting  or enable you to dodge the impact, by staying just inside “the rules”. Once firms are ready to get technical, PAS2060 and PAS2050 from BSI are quite helpful frameworks to start from, but it still takes informed market analysis to assess risks and opportunities associated with business change to downstream customers. Arguably downstream risk may not in any case be proportional to downstream emissions, it’s more a question of whether you and your customers have the capability to adapt: which is about more familiar (if no easier to assess) factors: leadership, investment, innovation etc. 

If, like Prof McGregor you run a business school, it’s not really just about whether you print less or turn off the lights at the end of the lectures. Your big climate risk is that if you do not educate MBA students of today to understand this stuff, they will be less employable, and your courses less saleable. What your graduates do with their MBAs is your emissions impact. 

Not convinced? Ok, we’ll produce a “bog standard guide” to help service businesses report their climate change risks and opportunities. This could take a while, and we’ll develop the theme with further articles. In the meantime, if you need help now, please let us know.

There are no rules governing Climate Change
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